China's photovoltaic industry faces difficulties due to price increases

CHINA. China's solar power industry has been struggling in recent days due to market demand and recent moves by silicon wafer manufacturers. Some companies in the industry have deliberately created the illusion of a serious shortage of polysilicon and silicon wafers, encouraging middlemen to hoard and drive up prices.

Since then, the price of polysilicon has risen 149% and the price of silicon wafers has increased 56%, according to Aikosolar, a producer of crystalline silicon solar cells. Preliminary statistics show that the industry's inventory in April and May increased 61,8% from the end of the first quarter of this year, reaching 68,6 GW.

A few days ago, Aikosolar published an article denouncing the insufficient supply of raw materials, high demand and sharply rising prices for silicon materials. From 2013 to the first half of 2021, the company was in full production and sales. However, since April this year, its operations have fallen by 60%.

In April, some polysilicon suppliers invited companies in the photovoltaic industry to bid weekly. The highest bid price was used as a reference the following week, which caused the price of polysilicon to rise sharply. The rapid price increase prompted global companies to follow suit, leading to a 37,2% increase in the price of polysilicon and a 23,5% increase in the price of silicon wafers.

Due to the change from “monthly prices” to “weekly prices” of products and the accumulation of materials by intermediaries, many companies saw their operations fall violently and had to renegotiate the contract with suppliers before a new adjustment could occur.

During SNEC 2021, held in Shanghai from June 2 to 4, 2021, representatives of the Chinese photovoltaic industry held meetings to discuss measures to prevent price increases and reached a consensus not to purchase more expensive polysilicon in large quantities. However, they expect the price of the product to fall naturally.

Niu Xinwei, CEO of JA Solar, said that although some manufacturers have quoted a trade price of 220 yuan (approximately US$34) per kilogram for polysilicon, overall, the supply of polysilicon, semi-finished products and circulation, and intermediate products in the second half of the year is considered sufficient.

From the perspective of component manufacturers, especially first-tier companies, their long-term purchase orders will not be accepted at a high level. Furthermore, polysilicon manufacturers still need to determine the appropriate price according to actual demand.

CPIA issues appeal for contracts to be fulfilled

With the rise in the price of polysilicon and silicon wafers and the impacts caused to the photovoltaic industry, mainly due to the reduction in the industry's operations and production, the CPIA (China Photovoltaic Industry Association) published an appeal recommending that All members and photovoltaic companies comply with laws and regulations.

In addition, they advise them to operate rationally, respect the spirit of the contract, and resist excessive hoarding of polysilicon and silicon wafer products. The Chinese association also called for avoiding price-raising behavior and speculative behavior that is not in line with their own production and operation needs, as well as resisting inappropriate behavior of malicious competition, such as dumping of low-cost components.

With this, it is expected that the price of silicon materials can return to the normal range as quickly as possible and, together, promote the healthy and sustainable development of the industry.